Medicaid Vs. Long-Term Care Insurance: Learn the Difference
Medicaid is a Federal and State funded health program that can assist some people with the cost associated with an extended care situation, but at what cost? It is not free. Although additional benefits may be added by individual states at their discretion, but all states are required to cover the following extended care–related services:
· Inpatient hospital services (excluding within institutions for tuberculosis or mental diseases)
· Outpatient hospital services and rural health clinic services: including any ambulatory services offered by such clinics and otherwise included in the specific state’s Medicaid plan
· Physicians’ services furnished in the office, patient’s home, hospital, SNF or elsewhere, or medical and surgical services furnished by a dentist (where state law permits either doctors or dentists to perform such services)
· Transportation to medical facilities
· Other laboratory and x-ray services
· Skilled nursing facility services, including custodial care, but excluding services in institutions for tuberculosis or mental diseases, for individuals 21 or older
States have the ability to apply, and many have, for permission to divert funds otherwise earmarked for Medicaid payments to nursing-homes for programs to keep individuals who are in need of extended care in the community/home. There are two programs: 1) Home and Community-Based Services (HCBS), or 2) Program of All-Inclusive Care for the Elderly (PACE). These programs have the dual purpose of keeping patients in the community/home longer and reducing costs.
The HCBS program is focused on attempting to keep younger individuals with intellectual and developmental disabilities in the community/home, while PACE focuses on frail elderly who would otherwise be institutionalized, the goal being to keep them in the community/home.
Where they do exist, which is not in every state, these programs help to fund:
· Home health care services
· Adult day care centers
· Assisted-living facilities
However, to be eligible for these programs, beneficiaries generally must also qualify for admission to a nursing home, but at the same time show that they could remain at home with assistance (this is not always easy to prove). The problem for the family is that even if Medicaid provided services, the family caregiver (usually the spouse or a daughter) would still have to be present. In reality, PACE does little to alleviate the emotional and physical stress of caring for a chronically ill individual.
In addition, with a few exceptions (New York, Arizona, and Vermont being the most notable), states are generally reluctant to fund these programs beyond a minimal level because they fear that family members or friends, who otherwise would have provided the care free of charge, would in essence “come out of the woodwork” (the “woodwork effect” is a term used by health policy experts) to apply for Medicaid. Even those states that do offer expanded services will often restrict eligibility by income, therefore setting a low threshold and thereby making it nearly impossible to qualify by simply transferring assets.
Medicaid is not always the best funding source for everyone to satisfy an extended care need, here is a quick summary of the main limitations that an applicant can face:
· The program has strict income requirements. If the applicant exceeds a state-mandated eligibility level, they may be denied.
· Most states have a maximum number of “slots”, which once filled, further applications are denied.
· The program is generally a last resort with the intent being to keep the patient from going into a nursing home. In addition, the family must show that the applicant is still able to live in the community/home safely. That means the family will have to continue to be available to support services paid for by Medicaid.
So as you can see, Medicaid does have some potential for covering those in need of extended care at home, but relying on and expecting the government to always be there to come to the rescue could be a dangerous gamble. Look into being self-sufficient and purchase your own personal extended care coverage in the form of Long-Term care insurance. Trust me… your family is worth it!
About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at 1-800-651-1953 or KMcDonald@Pivot.com.